China’s Miraculous   March

In the last one and a half decade, China has surprised the world by its rapid and sustained high economic growth that is transforming not only its economy but that of the entire world. At the turn of 21 st century, China is making progress in most of the socio-economic fronts buoyed by its visionary leaders and creative and hard-working citizens. As a nation of 1.3 billion population, China’s growth is having profound impact in every nook and corner of the world. Between 1978 and 2005, the Chinese GDP has quadrupled and is now the second-largest economy in the world in terms of Purchasing Power Parity (PPP). Known as the factory of the world, China has become the leader in mass production of cheap consumer goods affecting the markets far and near. Located in its border, Nepal can and should also tap huge benefits from the miraculous economic growth and prosperity spreading in China

By SANJAYA DHAKAL in Shanghai and Chongqing

Dreams sparkle in his eyes as Zhu Xiang talks about his future career. “I am quite confident that I will find good job at Multi National Companies once I graduate,” says the 20-something graduate student at Shanghai’s Jiao Tong University.

Pudong City : Breath-taking pace of development

There are good reasons for his optimism. For the last one decade or so, his country and particularly his city Shanghai has witnessed phenomenal economic growth. “Living conditions have improved considerably and there are more opportunities,” adds Chen Wenchan, another student. As an indication of growing prosperity, an average MBA graduate student can expect to earn up to $ 140,000 a year working at MNC in Shanghai, according to Guoxiang Huang, associate professor of International Business at the University.

The stories of Zhu and Chen reflect the amazing progress of China in the economic front. Since 1978 when the Chinese leadership decided to opt for market-oriented economic system, the country has been going through a steady growth. And since 1990s, this growth increased rapidly and in a sustained manner creating huge volume of wealth.

The city of Shanghai in the eastern seaboard has propelled, to a large extent, the transformation of Chinese economy in recent years. This ancient city ‘Pearl of the Orient’ is a witness to several phases of changes that have occurred in China in the last many hundred years – from ancient center of civilization to foreign aggression to communist nationalist change. But none could have been as dramatic as the one it is currently witnessing.

From what was basically an ordinary city with ordinary landscape, Shanghai has now become a sprawling metropolis of 1.3 million population and China’s leading center for trade, commerce, industry, science and technology. According to an official at the Shanghai Urban Planning Exhibition Center, the city will soon have over 4800 high-rise buildings that are more than 40 storey high.

Miracle of Pudong

It is hard to digest when Ma Xuejie says that this place was a non-descript fishing/farming village only ten years ago. Particularly, when you cannot stop staring with awe the massive high-rises, spick and span streets, wide roads and beautiful gardens.

Bond area of Sanghai city : A sprawling metropolis

Actually the development of Pudong began after the Chinese central government and Shanghai municipal government undertook a plan to develop it as a Special Economic Zone (SEZ) in early 1990. “And now the Pudong has been able to achieve an average of 19% growth. Although it is one-tenth of the total size of Shanghai, it economic share is one-fourth of the total of Shanghai,” said Ma Xuejie, vice director of Pudong New Area People’s Government.

The total GDP of Pudong – which lies on the east of Shanghai across the river Pu – this year stood at 200 billion yuan (Renminbi) – 30 times the volume 15 years ago. “We have opened our market in almost all sectors to the whole world. Around 12,000 foreign companies have already poured in $ 32 billion FDI in Pudong – one-third of total FDI in Shanghai. Among the Fortune 500 companies, over 200 have facilities in Pudong,” said Ma.

The development of infrastructure has been the most impressive in Pudong. The rice-fields have given way to aesthetically constructed and glistening high-rise building, a MagLev (magnetic levitation) train facility, deep water harbor, bridges, tunnels, highways and a brand new international airport.

“Within last 15 years, we have invested 300 billion yuan on fixed assets – two-third of them on infrastructures,” added Ma. Every year, Pudong witnesses 100,000 immigrants who come from rural parts of China in search of jobs. The city has created 1.2 to 1.5 million job opportunities in the last many years.

An automobile parts factory in Chongqing : Impressive facility

The city provides a host of facilities to investors and entrepreneurs. Its preferential policies on income tax, import tax and other administrative procedures coupled with marvelous infrastructure, efficient workforce, easy access to sea for export of products and a huge domestic market have helped in its progress.

Hence, not only global multinational companies but also Small and Medium Enterprises (SMEs) and start-ups have found Pudong a profitable base to operate from.

The city has a number of SMEs that are gaining footprint worldwide with their innovative products and competitive price. One such SME is Sassin International Electric. A producer of mini circuit breakers (MDB), distribution boxes and other electric accessories, Sassin is already the number one exporter of low voltage electric devices in China. Set up in Pudong in 1995, the company now exports its products to over 120 countries around the world. With 6500 dedicated employees and turnover of 1 billion yuan, Sassin expects to become global leader in the specialized manufacturing. “We have attained 30% growth in the last nine consecutive years,” proudly informs Chen Zhixian, chief business officer.

Shanghai city, along with Pudong, is home to over 250,000 SMEs – most of them privately owned – and with annual turnover of 400,000 yuan. The private entrepreneurs who work hard are reaping dividends for their creativity and dedication. Ms. Zengzeng Xu, the CEO of Shanghai Lanyer Investment, is another example of successful entrepreneur. A former teacher, she is now the head of a number of companies dealing in petrochemicals, export, import and even education that has over billion yuan of annual turnover.

Go West

Even as it basks in the glory of unprecedented wealth multiplication, China is not without problems like rising gap between the rich and poor and regional disparity. Unlike the eastern and southern flanks, the western region of China has not developed in a desired pace.

In order to speed up the development and progress of western hinterlands, the Chinese government has adopted a Open Up the West policy providing various incentives to investors and entrepreneurs.

Perhaps as a consequence of this strategy, Chongqing – a central-western municipality near the Sichuan province of China has been growing rapidly establishing itself as the largest municipality in China. The policy also helped Chongqing to move ahead of many other inland Chinese cities.

The rapid progress of Chongqing shows the success of the Chinese government’s policy to develop the west. However, the Chinese officials concede that they still need to do a lot to take development further into western hinterlands.

A former World War II capital of China, Chongqing has 30 million population. An industrial city and automobile capital of China, Chongqing’s change began after it was made a provincial-level municipality directly under the central government in 1997. Since then, the city has received increased central funding. In the years since, the city has developed impressive array of infrastructures like highways, tunnels, bridges and buildings.

As one professor at a university in Chongqing stated: for the 28 years since the formation of modern China, the development and progress concentrated in the east leading to a coining of proverb that ‘peacock is flying to the east.’ And the new policy is directed at changing this situation.

“If you compare the Chongqing of five years ago, it is totally different now. The city now has a lot of opportunities. In fact, statistics say that now 90 percent of students in our university find good jobs after graduation and 60% of them find jobs within the city,” said Wang Chongju, president of Chongqing Technology and Business University (CTBU).

The city is home to automobile factories of Changan Ford, among others. It also has factories of well-known brands of motorcycles like Loncin, Jianglin and Lifan. “There are three major reasons why we chose to open our factory in Chongqing. First, it has abundant water resources, second it has heavy industrial base and, third, it has favorable policies,” said Zhiqiang Pang, chief engineer of Yuxin Pingrui Electronics – which specializes in manufacturing of Ignitor for General Gasoline Engine, DC-AC Invertor, sensor, alarms etc.

How Can Nepal Benefit?

China has become a ‘hot’ topic all over the world. Whether in the US or Japan or EU, every one is talking about the progress of China- its awesome double-digit growth sustained over a long period of time.

When countries from far and wide are seeing the potential of growing China and latching on to extract benefits for themselves, Nepal – a neighboring country – can and should take the advantage.

Due to the China’s west development strategy, the fruits of economic growth is fast traveling to Tibet – the region with which Nepal shares 1400 km long border. The railway link between Qinghai and Lhasa is completing soon.

The proximity that Nepal enjoys with China – and also the another rising Asian giant, India – must provide it with ample opportunities in future.

The talk of Nepal’s development as transit route between China and India could become a basis for taking advantage of the growing neighbors. At present, Nepal’s total international trade stands at $ 2.3 billion (2003/04). Its major trading partner is India (over 57%); trading with China stands only at 6%. As a land-locked country Nepal has been facing handicap in enhancing its trade. Its trading costs are higher and efficiency lower. It has huge trade deficits with both neighbors.

With two of its closest neighbors – India and China – both rapidly growing at 7 and 10 percent respectively, Nepal is well-placed to take advantage. A proposal for Nepal acting as a transit bridge facilitating the trade transactions between China and India has, therefore, come as a promising venture.

As bilateral trade volume between India and China is growing astronomically (from $ 7.6 B in 2003 to $ 13.6 B in 2004 and expected to touch $ 20 B in 2008 and $ 30 B in 2010), there are ample opportunities for Nepal to extract benefits by facilitating overland trade interactions between them.

The benefits for Nepal can be numerous and varied including enhanced trade and investment opportunities; growth in investment; growth in manufacturing and industrial base within Nepal; infrastructure (roads/communication) improvement; development of service sectors like hotels, lodges, banks, insurance companies etc; positive impact on tourism; modernization of custom, procedures, documentation etc.

However, Nepal would need to ensure peace and stability; frame investment and trade friendly laws and regulations; flexible tax laws, business laws etc; infrastructure development: immediate upgrading of existing Kodari highway and gradual construction/development of alternative routes out of the seven already identified for the purpose to materialize the benefits of transit economy. Nepal already as bilateral transit agreement with India. It would need to reach into similar agreement with China after winning the confidence of both the neighbors and convince them of the significance of the transit bridge and enhanced trade between them via Nepal.